Analys från DailyFX
FTSE 100 – The Stalemate Continues as BoE Meeting Approaches
What’s inside:
- FTSE 100 continues to trade in a range, holding key support at 7300
- A breakdown likely to bring more momentum than a top-side break
- BoE tomorrow, impact to be felt more in sterling than the footsie
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The FTSE 100 has been a tough one to get a hold on over the past month. It starts to head for a breakdown below the increasingly important 7300-level, only to then reverse into the 7400s and find sellers. Round-and-round we go. It could be worse, it could be the Australian benchmark, ASX 200, which has gone into a bizarrely persistent range for nearly four months now. Anything is possible, but doesn’t seem likely we will see that with the footsie given the nature of large multi-national companies which the FTSE 100 is mostly comprised of. But the price action does beg the question, are you coming or going? (Breakout or Breakdown.)
At the time of this writing, the UK benchmark is trading below the February 2016 trend-line, which on a daily closing basis has held on several attempts to break below. If the market closes beneath, then pressure will once again be on support around 7300. The level, as we’ve discussed on several occasions, is quite important for keeping the outlook neutral at the least. A close below would constitute a triggering of the neckline of a double-top, drop below support dating back two-and-half months, and the 200-day MA. A slide to around 7100 would be the next likely move.
But until that happens, we’ll need to continue to hold a neutral outlook; can’t jump the gun just yet on being bearish. Support is support until it isn’t. What will turn the picture from neutral to bullish? A break above the recent range and sustained trade into the upper-7400s will be a good starting point. However, there is only a little room for trade up towards the 7550/600 area, where we could see the market once again struggle to gain traction.
From a tactical standpoint, giving the range the benefit of the doubt until broken, fading levels may continue to be the way to go. But as time elapses, traders will want to become increasingly careful with range-trading strategies as the likelihood of a sustained break increases.
We have a BoE meeting tomorrow; will this be a catalyst to help break the range? Perhaps, but the bigger price movement is likely to take place in sterling, and since the currency has had a diminishing impact on the direction of the footsie we may not see much reaction out of the index.
FTSE 100: Daily
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—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
You can follow Paul on Twitter at @PaulRobinonFX.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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